EXECUTIVE SALARY CONTINUATION AGREEMENT
This Agreement is made and entered into this 1st day of January, 1994,
by and between Humboldt Bank, a California state-chartered bank (the
"Employer"), and Xxxx X. Xxxxx (the "Executive").
RECITALS
WHEREAS, the Executive is an employee of the Employer serving as its
Senior Vice President and Cashier; and
WHEREAS, the Executive's experience and knowledge of the affairs of the
Employer and the banking industry are so valuable, it is deemed to be in the
best interests of the Employer to arrange salary continuation benefits for the
Executive so as to reasonably induce the Executive to remain in the Employer's
employment during the Executive's lifetime or until the age of retirement,
unless the employment relationship is terminated earlier as provided in the
Agreement; and
WHEREAS, it is the desire of the Employer that the Executive's services
be retained as hereinafter provided; and
NOW, THEREFORE, in consideration of the services to be performed in the
future, as well as the mutual promises and covenants contained herein, the
Executive and the Employer agree as follows:
AGREEMENT
ARTICLE I
1.1 Beneficiary. The term "Beneficiary" shall mean the person or persons
whom the Executive shall designate in a valid Beneficiary Designation Notice to
receive the benefits provided hereunder. A Beneficiary Designation Notice shall
be valid only if it is in the form attached hereto and made a part hereof and is
received by the Administrator prior to the Executive's death.
1.2 Change In Control. The term "Change in Control" shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule l4A of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or in response to any other form
or report to the regulatory agencies or governmental authorities having
jurisdiction over Employer or any stock exchange on which Employer's shares are
listed which requires the reporting of a change in control; or any merger,
consolidation or reorganization of Employer in which Employer does not survive;
or any sale, lease, exchange, mortgage, pledge, transfer or other disposition
(in one transaction or a series of transactions) of any assets of Employer
having an aggregate fair market value of fifty percent (50%) of the total value
of the assets of Employer, reflected in the most recent balance sheet of
Employer; or any "person" (as such term is used in the Exchange Act or any
individual, corporation, partnership, trust or any other entity) is or becomes
the beneficial owner, directly or indirectly, of securities of Employer
representing 25% or more of the combined voting power of Employer's then
outstanding securities; or in any one-year period, individuals who at the
beginning of such period constitute the Board of Directors of Employer cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election by Employer's shareholders, of each new director is
approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period; or a majority of the
members of the Board of Directors of Employer in office prior to the happening
of any event determines in its sole discretion that as a result of such event
there has been a change in control.
1.3 Disability. The term "Disability" shall have the same meaning given
such term in the Employer's Group Long Term Disability Benefits portion of the
Group Insurance Plan dated May 1, 1989, which is incorporated herein by
reference to the limited extent thereof.
1.4 Administrator. The Administrator and sole fiduciary of this
Agreement shall be the Employer.
1.5 Plan Year. The term "Plan Year" shall mean the Employer's fiscal
year.
1.6 Surviving Spouse. The term "Surviving Spouse" shall mean the person,
if any, who shall be legally married to the Executive on the date of the
Executive's death.
1.7 Termination for Cause. The term "Termination for Cause" shall mean
termination of the employment of the Executive by reason of any of the
following:
(a) The willful breach of duty by Employee in the course of
his employment.
(b) The habitual neglect by Employee of his employment duties.
(c) The substantial failure of Employee to perform the duties
of his positions as determined solely by the Board of
Directors of Employer, subject to good faith, fair dealing
and reasonableness by Employer and not as a result of
arbitrary and capricious acts by Employer.
(d) Employee's deliberate violation of any State of California
or federal banking laws, or of the Bylaws, rules, policies
or resolutions of the California Superintendent of State
Banks or Federal Deposit Insurance Corporation or other
regulatory agency or governmental authority having
jurisdiction over Employer.
(e) The determination by a state or federal banking agency or
governmental authority having jurisdiction over Employer
that Employee is not suitable to act in the capacity for
which he is employed by Employer.
(f) Employee is convicted of any felony or a crime involving
moral turpitude or a fraudulent or dishonest act.
(g) Employee discloses without authority any secret or
confidential information not otherwise publicly available
concerning Employer or takes any action which Employer's
Board of Directors determines, in its sole discretion and
subject to good faith, fair dealing and reasonableness,
constitutes unfair competition with or induces any
customer to breach any contract with Employer.
ARTICLE 2
2.1 Employment. The Employer agrees to employ the Executive in such
capacity as the Employer may from time to time determine. The Executive will
continue in the employ of the Employer in such capacity and with such duties and
compensation as may be determined from time to time by the Board of Directors of
the Employer.
2.2 Full Efforts. The Executive agrees to devote his full time and
attention exclusively to the business and affairs of the Employer, except during
vacation periods, and to use his best efforts to furnish faithfully and
satisfactorily services to the Employer.
ARTICLE 3
3.1 Retirement. If the Executive shall continue in the employ of the
Employer at least until attaining the age of seventy (70) years, seven (7)
months, the Executive may retire from active daily employment as of January 1,
2004, or upon such later date as may be mutually agreed upon by the Executive
and the Employer. In any event, however, the Executive may continue to work
after the age of seventy (70) years, seven (7) months.
3.2 Payment. The Employer agrees that upon such retirement it will pay
to the Executive the annual sum of Forty Thousand Dollars ($40,000.00), payable
monthly on the first day of each month following such retirement for a period of
One Hundred Twenty (120) months, subject to the conditions and limitations
hereafter set forth.
3.3 Death After Retirement. The Employer agrees that if the Executive
shall so retire, but shall die before receiving the full amount of monthly
payments to which he is entitled hereunder, it will continue to make such
monthly payments to the Executive's designated beneficiary for the remaining
period. If a valid Beneficiary Designation is not in effect, then the payment
shall be made to the Executive's Surviving Spouse, or if none, said payment
shall be made to the duly qualified personal representative, executor or
administrator of the Executive's estate.
ARTICLE 4
4.1 Death Prior to Retirement. In the event the Executive should die
while actively employed by the Employer at any time after the date of this
Agreement, but prior to January 1, 2001, or if the Executive chooses to work
after the age of seventy (70) years, seven (7) months, but dies before
retirement, the Employer will pay the annual sum of Forty Thousand Dollars
($40,000.00) per year to the Executive's designated beneficiary in equal monthly
installments for a period of One Hundred Twenty (120) months. If a valid
Beneficiary Designation is not in effect, the payments shall be made to the
Executive's Surviving Spouse at the time of death, or if none, said payments
shall be made to a duly qualified personal representative, executor or
administrator of the Executive's estate. The said monthly payments shall begin
the first day of the month following the month of the death of the Executive,
provided, however, that anything hereinabove to the contrary notwithstanding, no
death benefits shall be payable hereunder if it is determined that the
Executive's death was caused by suicide on or before December 31, 2003.
4.2 Disability Prior to Retirement. In the event the Executive becomes
disabled while actively employed by the Employer at any time after the date of
this Agreement, but prior to January 1, 1993, or if the Executive chooses to
work after the age of seventy (70) years, seven (7) months, but becomes disabled
prior to retirement, the Executive will be considered to be one hundred percent
(100%) vested in the amount set forth for the year in which the onset of
disability occurs as set forth in Schedule A attached hereto and made a part
hereof. Said amount at the election of the Executive will paid to Executive in a
lump sum within three (3) months of the determination of disability or be paid
in equal monthly installments over a period not to exceed One Hundred Twenty
(120) months or such shorter period as is mutually agreed upon by the Employer
and the Executive. If the Executive elects to receive monthly payments, interest
will be credited monthly on the unpaid portion of the accrued benefit at the
rate of prime plus one percent (1%). In the event the Executive dies within two
(2) years as a result of the injuries or illness that caused the original
disability, the full benefit amount, as set forth in Schedule A year ten (10)
attached hereto and made a part hereof, will be paid to the Executive's
designated beneficiary as outlined in this Agreement.
ARTICLE 5
5.1 Termination of Employment. The Employer reserves the right to
terminate employment of the Executive at any time prior to retirement. In the
event that the employment of the Executive shall be terminated prior to the
Executive's attaining the age of seventy (70) years, seven (7) months, or the
date of termination, other than by reason of disability or death, then this
Agreement shall terminate upon the date of such termination of employment;
provided, however, that the Executive shall be entitled to the following
benefits under the following circumstances.
(a) Termination Without Cause. If the Executive's employment
is terminated by the Employer without cause, the Executive
will be considered to be one hundred percent (100%) vested
as set forth in Schedule A, year ten (10), attached hereto
and made a part hereof. If the Executive's employment is
terminated under the provisions of this Paragraph 5.1(a),
the Employer will pay the Executive's vested amount upon
such terms and conditions and commencing at such time as
the Employer shall determine, but in no event commencing
later than age seventy (70) years, seven (7) months. In
consideration for this payment, the Executive shall fully
release Humboldt Bank, its officers, directors and
employees from any claim for breach of contract regarding
his Contract of Employment or wrongful termination of his
employment.
(b) Voluntary Termination by Executive. In the event that the
Executive voluntarily terminates his employment prior to
his attaining the age of seventy (70) years, seven (7)
months, the Executive will forfeit any benefits from this
Plan.
(c) Termination for Cause. If the Executive is terminated for
cause as defined in Paragraph 1.7 of this Agreement, then
the Executive shall be entitled to no benefits under this
Agreement and no amount shall be paid to the Executive
under this Agreement.
(d) Contract Disputes. In the event of termination of
employment due to the failure of Employer and Executive to
renew or extend any expired contract of employment, the
Executive will forfeit any benefits from this Plan.
(e) Termination Upon Change in Control. Anything hereinabove
to the contrary notwithstanding, if the Executive is not
fully vested in the amount set forth in Schedule A, year
ten (10), he will become fully vested in said amount in
the event of a change in control as defined in Paragraph
1.2 of this Agreement, and shall be entitled to the full
amount set forth in Schedule A, year ten (10), upon the
terms and conditions hereof, if termination of employment
thereafter occurs for any reason other than as set forth
in Paragraph 5.1(c), under this Paragraph 5.1(e) as a
result of such change in control. The amount payable
pursuant to this provision shall be reduced by the amount
paid to Executive under provisions of his Employment
Agreement covering loss of employment as a result of a
change in Bank ownership. The full amount specified in
Schedule A is referred to in this subparagraph 5.1(e) as
the "Severance Payment."
In the event that any payment or benefit received or to be
received by the Executive in connection with the change in
control of the Employer or the termination of the
Executive's employment whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Employer, (together with the Severance
Payment the "Total Payments") will not be deductible (in
whole or in part) as a result of Section 280G of the
Internal Revenue Code of 1954, as amended (the "Code"),
the Severance Payment shall be reduced until no portion of
the Total Payments is nondeductible as a result of Section
280G of the Code, or the Severance Payment is reduced to
zero (0). For purposes of this limitation:
(1) No portion of the Total Payments, the receipt or
enjoyment of which the Executive shall have
effectively waived in writing prior to the date of
payment of the Severance Payment, shall be taken
into account;
(2) No portion of the Total Payments shall be taken
into account, which in the opinion of the tax
counsel selected by the Employer's independent
auditors and acceptable to the Executive, does not
constitute a "parachute payment" within the meaning
of Section 280G of the Code;
(3) The Severance Payment shall be reduced only to the
extent necessary so that the Total Payments (other
than those referred to in clause (1) or clause (2)
in their entirety) constitute reasonable
compensation for services actually rendered within.
the meaning of Section 280G of the Code, in the
opinion of tax counsel referred to in clause (2);
and
(4) The value of any non-cash benefit or any deferred
payment or benefit included in the total payment
shall be determined by the Employer's Independent
auditors in accordance with the principles of
Section 280G of the Code.
ARTICLE 6
6.1 Termination of Agreement by Reason of Changes in Law. Employer is
entering into this Agreement upon the assumption that certain existing tax laws
will continue in effect in substantially their current form. In the event of any
changes in such federal laws, the Employer shall have the option to terminate or
modify this Agreement, provided, however, that the Executive shall be entitled
to at least the same amount as he would have been entitled to under Paragraph
4.2 of this Agreement relating to disability. The payment of said amount shall
be made upon such terms and conditions and at such time as the Employer shall
determine, but in no event commencing later than the age of seventy (70) years,
seven (1) months, or the date of termination of the Executive's employment with
Employer.
ARTICLE 7
7.1 Funding. The Employer reserves the right to determine in its sole
and absolute discretion, whether, to what extent and by what method, if any, to
fund this Agreement. In the event that the Employer elects to fund this
Agreement, in whole or in part, through the use of life insurance or annuities,
or both, the Employer shall determine the ownership and beneficial interest of
any such policy of life insurance or annuity. The Employer further reserves the
right, in its sole and absolute discretion, to terminate any such policy, and
any other funding of this Agreement, at any time, in whole or in part. The
Executive shall not have any right, title or interest in or to any funding
source or amount utilized by the Employer pursuant to this Agreement, and any
such funding source or amount shall not constitute security for the performance
or the Employer's obligations pursuant to this Agreement. The Executive agrees
to sign any documents and undergo any medical examination, or tests, which the
Employer may request and which may be reasonably necessary to facilitate any
funding for this Agreement including, without limitation, the acquisition of any
policy of insurance or annuity.
ARTICLE 8
8.1 Nonassignable. Neither the Executive nor the Executive's spouse nor
any other beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, modify or otherwise
encumber in advance any of the benefits payable hereunder. Nor shall any of said
benefits be subject to seizure for the payment of any debts, judgements, alimony
or separate maintenance owed by the Executive or the Executive's beneficiary or
any of them, or be transferrable by operation of law in the event of bankruptcy,
insolvency or otherwise.
ARTICLE 9
9.1 Claims Procedure. The Employer shall make all determinations as to
the rights to benefits under this Agreement. Any decision by the Employer
denying a claim by the Executive or the Executive's beneficiary for benefits
under this Agreement shall be stated in writing and delivered or mailed to the
Executive or said beneficiary. Such decision shall set forth the specific
reasons for the denial. In addition, the Employer shall provide a reasonable
opportunity to the Executive or said beneficiary for full and fair review of the
decision denying such claim.
ARTICLE 10
10.1 Unsecured General Creditor. The Executive and the Executive's
beneficiary shall have no legal or equitable rights, interests or claims in or
to any property or assets of the Employer. No assets of the Employer shall be
held under any trust for the benefit of the Executive or his beneficiaries or
held in any way as security for the fulfillment of the obligations of the
Employer under this Agreement. All of the Employer's assets shall be and remain
the general unpledged, unrestricted assets of the Employer. The Employer's
obligation under this Agreement shall be that of an unfunded and unsecured
promise by the Employer to pay money in the future. The Executive and its
beneficiaries shall be unsecured creditors with respect to any benefits
hereunder.
ARTICLE 11
11.1 Reorganization. The Employer shall not merge or consolidate into or
with another corporation, or reorganize or sell substantially all of its assets
to another corporation, firm or person, unless and until such succeeding or
continuing corporation, firm or person, agrees to assume and discharge the
obligations of the Employer under this Agreement. Upon the occurrence of such
event the term "Employer" as used in this Agreement shall be deemed to refer to
such successor or survivor corporation.
ARTICLE 12
12.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Executive and the Employer and as applicable, their
respective heirs, beneficiaries, legal representatives, agents, successors and
assigns.
ARTICLE 13
13.1 Contract of Employment. This Agreement shall not be deemed to
constitute a contract of employment between the Executive and the Employer nor
shall any provision of this Agreement restrict the right of the Employer to
terminate the Executive's employment or restrict the right of the Executive to
terminate his employment. In the event that Executive has a separate Employment
Agreement with Employer and in the event of any discrepancy or different
treatment of any term or condition in this Agreement from said Employment
Agreement, or any renewal or extension thereof, the terms and provisions of the
Employment Agreement shall control.
ARTICLE 14
14.1 Notice. Any notice required or permitted of either the Executive or
the Employer under this Agreement shall be deemed to have been duly given, if by
personal delivery, upon the date received by the party or its authorized
representative; if by facsimile, upon transmission to a telephone number
previously provided by the party to whom the facsimile is transmitted as
reflected in the records of the party transmitting the facsimile and upon
reasonable confirmation of such transmission; and if by mail, on the third day
after mailing via U.S. first class mail, registered or certified, postage
prepaid and return receipt requested, and addressed to the party at the address
given below for the receipt of notices, or such changed address as may be
requested in writing by a party.
If to Employer: Humboldt Bank
Attention: Personnel Officer
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
If to Executive: Xxxx X. Xxxxx
____________________________
____________________________
ARTICLE 15
15.1 Partial Invalidity. If any term, provision, covenant, or condition
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, such determination shall not render any other term,
provision, covenant or condition invalid, void or unenforceable, and the
Agreement shall remain in full force and effect notwithstanding such partial
invalidity.
ARTICLE 16
16.1 Arbitration. All claims, disputes and other matters in question
arising out of or relating to this Agreement or the breach of interpretation
thereof shall be resolved by arbitration before the Judicial Arbitration and
Mediation Services, Inc., ("JAMS"), 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx,
Xxxxxxxxxx, 00000. In the event JAMS is unable or unwilling to conduct the
arbitration pursuant to this provision, or has discontinued its business, the
parties agree that the American Arbitration Association ("AAA"), 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, shall be selected as a substitute for
JAMS subject to the same terms set forth herein; provided, however, that the
rules of AAA shall apply to the conduct of the arbitration to the extent not
inconsistent with the intent of the parties as expressed herein. Any award
rendered by JAMS or AAA shall be final and binding upon the parties and as
applicable, their respective heirs, beneficiaries, legal representatives,
agents, successors and assigns, and the obligation of the parties to arbitrate
pursuant to this clause shall be specifically enforceable in accordance with
Title IX of the California Code of Civil Procedure. Any arbitration hereunder
shall be conducted within the city limits of Eureka, California.
ARTICLE 17
17.1 Governing Law and Jurisdiction. The laws of the United States of
America and the State of California, other than those laws denominated choice of
law rules, and the rules and regulations of the Board of Governors of the
Federal Reserve System shall govern the validity, construction and effect of
this Agreement.
ARTICLE 18
18.1 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect thereto. Each party to this
Agreement acknowledges that no other representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not set forth herein, and that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding on either party.
ARTICLE 19
19.1 Modifications. Any modification of this Agreement shall be
effective only if it is in writing and signed by a party or its authorized
representative.
IN WITNESS WHEREOF, the Employer and the Executive have executed this
Agreement in the city of Eureka, state of California on the date first
above-written.
EMPLOYER: EXECUTIVE:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxx
Xxxxxx X. Xxxxxx Xxxx X. Xxxxx
Chairman of the Board
